The term "voluntary agreements" is defined by the International Energy Agency as "essentially a contract between the government and industry, or negotiated targets with commitments and time schedules on the part of all participating parties." The targets are often set through negotiation, and industry often meets the targets with the help of supporting policies and programs from the government. This concept is an alternative to the command and control regulation that has characterized most environmental policies up until now. By offering flexibility, voluntary programs hope to inspire innovation that will maximize the impact of the program while minimizing the cost of achieving the target.

The voluntary agreement is typically made up of the following elements:

• The setting of a target, usually by negotiation between government and industry, though it can also be proposed and/or set by industry or government. This target should be based upon an assessment of the energy efficiency or greenhouse gas (GHG) emission reduction potential of the plant/company/industry.
• The offer of considerations by government to industry for meeting the targetrs, often taking the form of monetary incentives or regulatory relief and typically called supporting policies or programs. It is essential that industry know what the government is willing to provide in terms of support prior to making a commitment to a certain target.
• Acceptance of the target and a commitment to meeting it by industry.
• Finally, monitoring and evaluation to assess the continuing progress toward meeting the target.

The details of each element can vary significantly, with each approach offering benefits and limitations. One of the most important issues is the meaningfulness of the targets. Carbon and energy intensity of industry in the United States continues to improve, as it has for the past century, so targets must represent a commitment that exceeds business as usual. Examples of initiatives exist (both domestically and internationally) that have successfully balanced the benefits and limitations of each element.

In spite of a lack of leadership by the federal government, some industries and industry groups have begun to propose their own initiatives. The most prominent initiatives offer at least a framework for building meaningful progress, though the targets offered are often less challenging than can be achieved with a strong effort. What is clear is the continued lack of effort on the part of the federal government toward offering meaningful support for industry voluntary commitments. This effort is necessary in order to realize more significant progress on energy efficiency and greenhouse gas reductions.

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23 pp., 2003, $16.00, IE033